E-2 Visa Roadmap

The E-2 treaty investor classification is available to nationals of treaty countries coming to the U.S. solely to develop and direct the operations of an enterprise in which the foreign national has invested, or is in the process of investing, a substantial amount of capital.

While the U.S. government has not established a minimum amount of capital necessary for E-2 classification, a generally accepted amount is $100,000. However, this is not a mandatory investment threshold. E-2 status has been granted to applicants who have invested much less. For example, applications have been approved for a startup consulting company where the investor already spent about $40,000 in the engagement of Americans (employees, contractors, or vendors), $10,000 for office, supplies, and equipment, and $50,000 for working capital.

E-2 classification is not only available to treaty investors but also to their employees. To qualify as an , the applicant must have the same nationality as the E-2 employer and enter the U.S. to primarily perform executive or managerial duties, or demonstrate specialized skills essential to the investor’s operations in the U.S.

E-2 Requirements

The treaty investor, whether an individual or a business entity, must possess the nationality of an E-2 treaty country, and must have made or be in the process of making a substantial investment in a real and active for-profit enterprise producing a service or commodity. The applicant must demonstrate that he or she has the authority to develop and direct the investment enterprise, and the investment must result in a significant economic contribution.

The biggest hurdle to overcome in obtaining E-2 classification is demonstrating that the applicant is making a “substantial” investment. Substantial can be met by demonstrating that (i) the amount invested is substantial in proportion to the total value of the enterprise for similarly established enterprises; or (ii) the amount invested is the normal amount necessary to establish a viable enterprise for the new business.

If the actual “at risk” investment is more than half the value of the enterprise, it should meet the “substantial” test. For example, an investment of $80,000 cash in a motel purchased for $440,000, where the balance was secured by a mortgage, is not substantial. However, a cash investment of $80,000 for a business purchased for $150,000 will likely meet the substantiality test. Or, if the investment is over $1 million, where the business is costing $10 million including debt, the investment may be substantial irrespective that the amount invested is only 10 percent of the business.

 In addition, the applicant must have control over the U.S. enterprise. Having 50 percent control is sufficient, even where the 50 percent ownership is in a joint venture. This, of course, provides an opportunity for two people (presumably partners) to apply for E-2 classification based upon a “joint venture” arrangement.

The money invested also must be “at risk” and subject to loss. Collateral for a loan must be from personal assets or a personal signature on a loan. Mortgage debt or a commercially secured loan (e.g., a loan secured by the business’s assets) is not sufficient. The applicant must also demonstrate that it is his or her money at risk, and that the U.S. business cannot be a passive investment like stocks or undeveloped land. However, land development as opposed to land investment is permissible.

As stated above, the applicant’s investment must be more than “marginal,” meaning it must have the present or future capacity to generate more income than required to cover the investor’s living expenses.

Documentation

Apart from proof of the individual applicant’s citizenship, the following evidence must be provided:

Evidence of Ownership and Nationality – Company formation documents as applicable, such as Articles of Incorporation or Organization, Operating Agreement, Partnership or Joint Venture Agreement, stock certificates and ledgers, share certificates, an organizational chart displaying the entity’s ownership structure, reports from a Certified Public Accountant and copies of the biographic pages of the owners’ passports, along with the individual percentage of their ownership.

Real and Operating Commercial Enterprise – Proof of a real and operating business enterprise may include licenses and permits, incorporating documents of a new business, receipts and invoices of customers and suppliers, lease or deed and closing statement of the business’s building, bank statements and phone bills, letters from customers or suppliers or lenders doing business with the company, business promotional literature or product inventory brochures.

Investment – A detailed statement by the applicant explaining how funds used in the investment were acquired or accumulated, along with evidence such as proof of property ownership and promissory notes, lease agreements, or personal tax returns for the past three years.

Evidence of investment in existing enterprises may include copies of canceled checks or wire transfers from the investor for all initial deposits, partial payments or transactions paid in full, and loan, promissory, or mortgage documents and security agreements. For investment in a new enterprise, shipment invoices of inventory, equipment, or business-related property, receipts for inventory purchases, a canceled check for the first month’s rent or a full annual advance rent payment, lease agreement, purchase orders, improvement expenses or initial business account statements may be submitted.

Marginality – Proof of non-marginality focuses on American jobs being created or maintained. Proof may include financial statements, U.S. corporate income tax returns, payroll registers, Forms W-2 or 1099s, and personnel organizational charts.

The applicant should also provide proof that he or she is in a position to develop and direct the investment enterprise, which can be demonstrated with copies of corporate minutes evidencing that he or she is an officer or director of a U.S. company, copies of stock certificates showing majority ownership or filing certificates for assumed names.

Applications for prospective E-2 employees should also contain an organizational chart showing the applicant’s managerial or executive position in the U.S., the applicant’s résumé, and copies of relevant degrees or certifications.

Admission

An initial stay is granted for two years; after that, E-2 status can be extended in two-year increments for as long as the individual owns and operates the business. This could be for the rest of the person’s life so long as they continue to maintain control over and operate the business. Otherwise, once the business is sold or closed, the person must leave the U.S. unless another immigration option is available.

Family

The E-2 applicant’s spouse and unmarried children under the age of 21 are eligible to apply for spousal E-2S or dependent E-2Y status to accompany or join the E-2 principal in the U.S., even if they are not nationals of the treaty country. E-2 spouses and children may attend school part-time or full-time. E-2 spouses are automatically authorized to work incident to their status, and any valid I-94 Arrival/Departure Record is considered proof of work authorization.

Strategies/Options

Control – The E-2 classification requires the applicant to have 50 percent “control,” not “ownership.” So, a typical Silicon Valley startup may begin with one American and one E-2 treaty citizen, each owning 50 percent. Then, in a subsequent capital raise, the co-founders’ stakes drop to 45 percent each. Normally, this would terminate the E-2 status. However, a simple “voting proxy” of 5 percent to the E-2 from the American would allow for the E-2 status to continue.

Ownership – The E-2 classification allows for the applicant to control 50 percent. This, of course, provides an opportunity for two people (presumably friends with separate but strategically aligned businesses) to apply for E-2 status based upon a “joint venture” arrangement.

Investment – Young entrepreneurs may not have the cash to invest in their startup, but E-2 investors (unlike E-2 employees) who control at least 50 percent of the U.S. company, must put some money “at risk.” The E-2 classification allows for family or friends, foreign or domestic, to loan them the at-risk investment amount, provided they are personally guaranteeing the loan and such guarantee is not secured by assets of the E-2 business.

Marginality – The E-2 classification requires that the applicant’s investment is not marginal or solely for the personal benefit of the investor. There must be either U.S. jobs created (new business) or maintained (purchasing an existing business). However, those jobs may be direct (employees), indirect (contractors and consultants), or induced (vendors providing services).

– E-2 treaty investor status is temporary in nature. A written statement expressing the applicant’s intent to return upon termination of E-2 status is usually sufficient.

Company Registration – Company registration is an essential part of the E-2 visa process. For the individual to qualify for E-2 classification, the E-2 company must first meet all the criteria mentioned above and be registered as an E-2 company. Based on the specifics of the relevant treaty and guidance provided by the U.S. Department of State to its consular posts abroad, consulates may grant E-2 visas that are valid between three months to five years. However, once a company is registered, subsequent applications for additional E-2 visas can be significantly expedited and simplified.

Legal and policy sources:

Immigration policies and regulations are complex and frequently subject to change. The information contained in this roadmap is intended to provide you with a general overview and may not address your particular circumstances and needs. Serotte Law will assist you with the application and documentation process and answer any questions you may have about the E‑2 classification. Request a consultation or give us a call at 888-875-8110.

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